1. Exquisite Tweets from @t0nyyates

    PreoccupationsCollected by Preoccupations

    So does nationalization cost anything? It would happen by issuing debt to acquire an asset - a company.

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    Tony Yates

    If transactions costs were small, and the market price knowable, the transaction cd be reversed at any time leaving the govt at square one.

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    Tony Yates

    Might be a 'cost' to extent that the net revenue stream acquired injects risk. In same way that private sector QE transfers risk to public.

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    Tony Yates

    At times - hence private sector QE - that transfer, though costly, might be beneficial, if market's ability to bear it is impaired.

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    Tony Yates

    In case of strategic companies like water, risk transfer might be smaller than it appears, if public sector implicitly bears this anyway.

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    Tony Yates

    Next q is what the govt does with company strategy, and what it does with the revenues.

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    Tony Yates

    Stark eg: Venezuelan oil. Sold at subsidised or zero prices. Staffing used as patronage, etc. Not a serious comparison; to make a point

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    Tony Yates

    If public ownership used to change company strategy in a way that impairs the revenue stream; this is a 'cost'.

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    Tony Yates

    That includes, eg, making eg water company 'profits' more likely to be diverted away into govt transfers.

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    Tony Yates

    Equally, nationalisation might in principle make regulation simpler, eliminating rents, improving efficiency.

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    Tony Yates

    Aside from effect on narrow revenue stream, this could improve other govt revenues from elsewhere in the tax base.

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    Tony Yates

    Borrowing money to buy a house not a good comparison. Since here I am borrowing to consume the housing services.

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    Tony Yates

    Better comparison is borrow to buy and then let out. But only slightly better. Here the risks for lender are large.

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    Tony Yates

    ie large relative to my other revenue streams that would be there to service/repay the debt.

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    Tony Yates

    Also, there's the issue of credit / management histories. UK credit history good, apart from quite a lot of 1950+ inflation/fin repression

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    Tony Yates

    UK govt history of managing nationalised industries somewhat less compelling. [end]

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    Tony Yates